Friday, March 20, 2009

There is a flurry of law-making activity in the US House of Representatives and in the US senate to impose upto 90% taxes on large bonus payouts to individuals. AIG's ill-timed bonuses have outraged the entire nation and have led lawmakers to to use this blunt blow to root out bonuses in all sick companies supported by taxpayer money. But the move is a populist one, and one that may have far deeper consequences than recovering a few hundred million in bonus money. I am afraid there is a lot to lose with this last minute decision of making a law limiting bonuses. The taxpayer will actually end up loosing much more in the long run.

In many companies bonuses are given across the organization to all employees. A bonus for a good quarter, a bonus for Christmas, etc. But in knowledge-intensive fields bonuses are disproportionately distributed and given a small subset of employees who create exceptional (significantly over the average) value for the company. Knowledge-intensive fields include finance and banking where a talented person can create a lot more value than another lesser talented person. The distinction between employees is easily measurable in banks (earned profits) and therefore banks can easily reward better-performing employees. The reason for the reward is the hope is that a better performing employee can be retained in the company if she is paid a bonus.

A modern bank's success is almost wholly dependent on its employees. Banks are no longer armies of clerks following a rule book and doing the same thing every single day. Instead, banks are participating in a very sophisticated knowledge-based global game where bankers make decisions on how to invest their depositor's money. They employ some of the brightest minds to compete with other bright minds of other financial institutions, all of them trying to maximize returns on invested money. Quite naturally, the financial institution with the most creative, innovative, smart, and industrious people will take it all away.

Not all minds are equal. Hence all bankers cannot be paid the same income. Its a mind game, and intellect is not equal across the board in every employee (perhaps unfortunately, but certainly by natural design). Bankers are men and women like the rest of us. They will gravitate to financial institutions which pay better. By removing the bonus incentive for bright people in ailing financial institutions we are clearly reducing the chances of these institutions recovering taxpayer money as the brightest will leave or be less motivated.

Bonuses have been wrongly maligned in this whole saga. They are one of the best tools to improve worker productivity, commitment, and a company's bottom line.

Tuesday, March 10, 2009

Today there is an extremely interesting article in WSJ about Firefox's threat to Google. No this is not about Firefox vs. Google's Chrome browser. It is about a small feature in recent Firefox browsers that stores web-pages accessed via the browser off-line and presents this locally-stored content as search results to users as they type words into the Firefox browser's address bar. Such local caching is not a new concept, but the nice interface that Firefox provides is certainly a huge improvement. The article says that local caching of data will eventually erode the high number of search requests going to Google, thereby reducing the value of its search engine. Local caching makes sense for users who get their (locally available) content faster, can access cached content when off-line, and do not have to pay for bandwidth. It makes sense for the content providers that do not have to serve the same content multiple times to the same user, and it makes sense for ISPs whose (flat-rate) bandwidth is spared.

But before content can be cached locally, it needs to be searched and found (at least once) on the Internet...and there is a good chance Google will be employed to do this first search. Still, from my experience I will say that I often search the Internet for the same information. With a convenient locally accessible cache, I would cut the number of times I go to Google. Moreover, there is talk in academic circles about "leaf computing", the opposite of cloud computing. The idea of leaf computing is to build distributed computing platforms. For example, a bunch of like-minded individuals can self-organize their computers into a distributed, specialized web-crawler that goes and searches the Internet for relevant information to index, or syncs up the saved book-marks/local Firefox caches of several users. If there is enough bandwidth and storage on the 'leaf' computers, then why not move away from cloud computing and into a distributed leaf computing architecture?

From a Google Ad-sense point of view, I think Google may modify its search engine usage terms to have the right to serve ads even on locally cached content if this content was initially found using Google. Others may argue that all the value is delivered to a user the first time search results are used (like buying a song: you pay the same no matter how many times you listen), and so Google cannot serve ads for locally cached content. Does Google have the right to serve ads on locally stored content that it initially found? This is analogous to the TIVO advertisement issue of whether advertisement slots bought for a live show can be removed and other advertisements inserted for later recorded playback.

I have done 3 fun things over the past 2 months. First, I bought a very capable text.phone - the Nokia E71. Second, I connected my phone to my blog so I can send an email to my blog and it gets posted. And third, I set up a Twitter account where I can post messages via SMS.

Now this changes things. Suddenly I am untethered like never before. The ability to capture and publish information in real-time has moved from professional TV camera crews riding satellite TV vans to anyone with a phone that can send SMS.

That's change for the better. And one more example where tech and gadgets leave the nerd domain and change mainstream society. Information flowing freely, leaking through the porous gaps made possible through such emerging technology will loosen the grip of those who seek to control information, and by extension, the free will of people.

Friday, March 6, 2009

Blackberry is joining the app-store party by launching its own application store for the the Blackberry platform. There is a nice developer website and lots of buzz around RIM's latest move to take on the growing popularity of iTunes's app-store and the upcoming Nokia Ovi app-store. It is going to be an uphill battle catching up with the iPhone for all these me-too app-store ; but the Blackberry platform is a slightly different beast and its app-store positioning is quite different for some reasons.

First, most Blackberries are corporate property with significant organizational IT control over the devices. RIM may be positioning the developer tools and app-store for corporate IT development rather than for encouraging college-kid hackers who are trying to make a fast buck or two by writing a small game etc. This may explain why the Blackberry developer license ($200) is more expensive than the iTunes developer license ($99). In my opinion Blackberry isn't nearly looking to equal the number of iPhone applications. Its looking for serious business centric stuff on its app-store.

Second, Blackberries are not fun devices. When I see a Blackberry I start thinking of my consultant friends, complete with black suits and polished leather shoes! The Blackberry application consumer is going to be very unlike a 14-year old teen touting yet-another facebook widget on her iPhone. Instead, its going to be a corporate IT vice-president who likes an activity logging tool for the Blackberry to keep tabs on employees. Or an executive who downloads an extension of pocket-Excel for say, better readability. Bottomline: serious business applications.

Third, Blackberry apps will have to "work" much harder to gain the trust of potential downloaders. Blackberries carry confidential data and compromising this data could put the owners business (and/or job) at risk. Imagine the consequences of a software trojan that opens a connection to a server, dumps the contents of the Blackberry, and then blackmails the user or her organization? Certified and branded software applications have a much better chance of acceptance in the Blackberry user space.

Lastly, the Blackberry back-end is a unique add-on for developers. The "push" technology back-end of RIM can be used to create innovative applications on the Blackberry that may not be possible on other platforms. Question is, what is the (other) killer application for RIM push technology?